On a $1,200,000 home in California, the buyer-broker commission is, traditionally, $30,000. That is more than most people spend on a car. It is more than the down payment on a smaller home. It is, by any honest accounting, one of the three largest expenses of a home purchase, alongside the down payment and the loan-origination costs. And yet, when you ask most buyers what they got for that $30,000, the answer is some variation of: 'My agent drove me to houses and helped me write the offer.' That answer has been good enough for sixty years. It isn't anymore.
Who actually pays the buyer's agent
There is a comforting myth, repeated in millions of conversations, that the seller pays the buyer's agent. Technically, that's how the check is cut at closing — the seller's proceeds fund both sides of the commission. Economically, it's not quite that simple.
Sellers price their homes with the full commission load in mind. A seller who knows they're paying 5% in total commissions lists at a price that nets them what they actually want. The buyer, paying that list price, is funding both sides of the commission through the purchase price — and through the larger mortgage they take out to cover it. Saying 'the seller pays' is a bit like saying your employer pays your payroll taxes; the money flows through them, but it ultimately comes out of the same pool as your wages.
After the August 2024 NAR settlement, this fiction is harder to maintain. Buyer-agent compensation is now an explicit, negotiated line item. Sometimes the seller offers it as a credit. Sometimes the buyer pays it directly. Sometimes it's split. The point is that it is now a visible cost the buyer can negotiate, structure, or — with the right brokerage — recapture.
What the 2.5% is actually buying
If you list every task the buyer-side commission funds in a typical California transaction, the list is shorter than the marketing implies:
- Showing scheduling and access (now largely automatable).
- Comparable-sales analysis (now produced by AI in under a minute).
- Disclosure review and red-flag flagging (also now AI-assisted).
- Drafting the offer on the California Residential Purchase Agreement (RPA).
- Negotiating counters, credits, and repairs.
- Managing inspection, appraisal, loan, and disclosure contingency calendars.
- Coordinating with escrow and title through close.
The first three are the parts that used to require a percentage-based fee. They no longer do. The last four are real, licensed, human work — but they are fixed-cost activities. They take roughly the same number of hours whether the home costs $600,000 or $2,400,000. Charging twice as much for the same work, just because the home is more expensive, is exactly the kind of pricing that gets unbundled when the market figures out it can.
Why the fee was historically a percentage
Percentage commissions made sense in the era they were designed for. They aligned the agent's incentive with selling the home rather than letting it sit. They simplified accounting in a paper-based industry. And they let the cost be embedded in the seller's contract and split through the MLS without ever appearing as a dollar figure to the buyer. The structure was elegant — for the industry. For the consumer, it was a fee that grew automatically with the price of the home and never grew automatically with the work being done.
How a buyer rebate actually works
A buyer rebate, also called a commission rebate or buyer credit, is straightforward. The buyer's brokerage negotiates a buyer-side commission as part of the contract — usually around 2.5% in California, paid by the seller as a credit at closing. The brokerage then returns a portion of that commission to the buyer, either as a closing-cost credit or as cash, depending on the lender's rules.
Buyer rebates are explicitly legal in California, and have been since 2005 when the U.S. Department of Justice intervened to clarify that state-level prohibitions on rebates were anti-competitive. They are also legal in roughly forty other states. Some states still restrict them; California is not one of them.
How Zeego splits the 2.5%
Zeego operates as a licensed digital brokerage in California. On a typical transaction where the seller has agreed to a 2.5% buyer-broker commission, the math is simple:
- 0.75% is retained by Zeego to operate the brokerage — drafting the offer on the RPA, advising on terms, running the transaction calendar, and managing close.
- Up to 1.75% is rebated back to the buyer at closing as a credit against closing costs, or as cash if the lender allows.
On a $1,200,000 home, that's a $21,000 rebate. On an $800,000 home, it's $14,000. On a $2,000,000 home, it's $35,000. The rebate scales with the price of the home — because the underlying commission did — but the work Zeego is doing for its 0.75% is the same fixed scope of licensed transaction work in every case. That is the whole point. The buyer pays for the work that's being done; they keep the rest.
Lender rules and how the credit shows up
Most lenders allow a buyer-broker rebate to be applied as a credit toward the buyer's closing costs and prepaid items, which can include escrow fees, title insurance, transfer taxes, prepaid interest, and the funding of the impound account. If the rebate exceeds the buyer's total closing costs, lender rules typically cap the credit at the actual closing-cost amount. If you want any excess paid to you in cash outside of closing costs, you'll want to flag that with your lender early; some allow it, some don't.
Importantly, a rebate is not taxable income to the buyer in most cases — the IRS has consistently treated it as a price adjustment to the purchase, not as ordinary income. Your tax situation may differ; talk to your CPA. But for most buyers, the rebate is a clean reduction of out-of-pocket cost.
How to make sure you actually capture it
- Sign your buyer-broker agreement before touring, with the rebate explicitly written in. Post-NAR-settlement, this is now standard.
- Make sure the listing brokerage is offering buyer-side compensation. Most still are; some are not. If they aren't, the rebate can still be structured by writing the commission into the offer as a seller credit.
- Coordinate with your lender early. Tell them the credit is coming and confirm how it will appear on the closing disclosure.
- Check your closing disclosure carefully. The buyer-broker rebate should appear as a credit on page 2 or 3 of the CD, depending on how it's structured.
The honest summary
The 2.5% buyer-broker commission is a legacy of a market structure that no longer exists. Most of what it used to pay for is now done by software. The part that still requires a licensed human is a fixed amount of work that doesn't scale with the home's price. A digital brokerage with low overhead can do that work for a fraction of the traditional fee and return the rest. The only reason most buyers don't capture this is that they don't know they can.
If you're buying a home in California, the dollars on the table are real and the mechanism is straightforward. Run a property report on Zeego, sign the buyer-broker agreement with the rebate written in, and keep up to 1.75% of your purchase price at closing.